I first heard the term “breakage” when learning about betting on horses. Breakage is the rounding down (never up) of payoffs to the nearest nickel, dime, quarter or dollar, ostensibly to eliminate the need for mutuel clerks to handle pennies or other small change. Breakage also helps fund “minus pools” in which the net amount bet on losers does not cover the legally mandated minimum payout of $2.10 on a winning $2.00 bet. However, breakage really is a surcharge on almost every winning bet a horse player makes, especially when the rounding down is to an amount greater than a nickel, or when it is imposed on non-cash betting accounts.

In the casino gambling industry, the term is used to describe when an establishment does not have to give something a patron has been offered or is entitled to, as explained in this post. Casinos want to appear generous in extending offers to potential patrons, but don’t necessarily want to incur the costs of fulfillment to everyone who shows up to take advantage.

Breakage also occurs in the commercial world. I have written about several varieties, such as the gas discount that may be used only once for up to 20 gallons, when most people’s cars have tanks that don’t hold that much, and coupons that, in large type, purport to apply to any item in the store; the small-type exclusions (which always seem to apply to the item you intend to purchase) are not apparent until after you’ve traveled to the store and been told the bad news at the check out counter.

I don’t understand how merchants believe that losing a customer who feels misled by an offer (even if, when carefully read, the offer fairly represents its terms) is worth the savings it can realize in terms of breakage. I prefer giving my business to businesses that are forthright in their communications with customers and don’t play “gotcha.”

Video poker can be one of the best games for players offered by real casinos (the faux video poker in racinos should be avoided). However, not all video poker is the same, and the bad games can be among the worst, as can the better games if not properly played.

This post lists (and explains) some of the common mistakes I’ve seen video poker players make – mistakes that can cost a lot of money. What I can’t do in this post is explain the proper strategy for each game. That you have to learn on your own. If you choose to, you will be rewarded both monetarily and, I believe, with greater satisfaction and enjoyment when you play. I recommend starting with jacks or better, which is one of the more popular games, and on which many other games are based. Wizardofodds.com has everything you need to teach yourself the right way to play jacks or better and most other video poker games.

1. As stated in part one of this post, many players assume all machines offering the same game at a given denomination are the same. In a grocery store, all one quart cartons of the same brand milk sell for the same price. In most casinos, this is not the case. A 7/5 jacks or better machine often sits next to a 9/6 machine. The pay table is the price tag. Don’t be the person playing the 7/5 machine. Vpfree2.com can help you find the games with the best pay tables. Don’t ever play on a machine with less than the best pay table for that game and denomination in that casino.

2. Most video poker machines allow you to play one to five coins. Given the same game and pay table, many players wrongly assume the odds are the same whether they play one coin on a $5.00 machine or max coin on a dollar machine. However, a close look at the pay table below (the vertical columns show the payoffs -which include return of your bet – for each hand with one, two, three, four or five coins played, respectively) shows that the royal flush at max coin pays a large bonus – 4000 units, as opposed to 1250 without the bonus. A one coin royal on a five dollar machine would pay only 1250 (250 shown at the top of the first column times the five dollar base unit). I know of no video poker machine that does not offer at least one payout bonus for max coin. You never should play video poker for less than max coin. If you can’t afford to play a game at max coin, find a machine at a lower denomination that you can afford to play at max coin.

3. Don’t assume that the strategy for one game is the best way to play any other game. The optimum strategy for any video poker game is calculated based on the pay table. Any difference in the pay table requires a different strategy for optimum play. For some games, using the optimum strategy for a different game is not a huge mistake, but for others, it is. Don’t play games you don’t know how to play. They are not all the same.

4. Don’t assume that the pay table on the game you played on your last visit to the casino hasn’t changed. Casinos often change pay tables and move machines without giving notice. Even if a machine you played on a prior visit looks the same, take a minute before you start playing to make sure the pay table hasn’t been downgraded. And be sure to check the payouts for all hands, not just the ones that usually are changed, such as full houses and flushes in jacks or better.

Like most horse racing fans, I have been disappointed with the direction in which NYRA has been heading in recent years. While NYRA implicitly acknowledges the importance of the owners, trainers, jockeys and others who “put on the show,” those of us who finance the show feel we have been neglected and at times — such as when NYRA illegally overcharged us on certain bets, to name but one — abused. While VLT revenues have been used to inflate purses to wholly unrealistic levels, especially for low level claiming races and races restricted to New York breds, I am not aware of any meaningful portion of that money being directed to fans and bettors in the form of decreased takeout or reducing the costs of admission, programs, food or other fan amenities. I also am not aware of any meaningful expenditures to retain the existing (and declining) fan base, or to develop the new fans needed to sustain racing in the future. One need only to look at your closest competitors, the casinos, to see why customers have fled racing in droves: those establishments excel at customer service, make their customers feel valued by not nickeling and diming them with admission and other charges, and by rebating meaningful amounts of money wagered to even low rollers in the form of free meals and other comps.

You may think it unimportant to cultivate fans as long as you are receiving a portion of VLT revenues; I submit such a view would be short sighted. First, casino gambling revenues are declining in most jurisdictions, due to saturation of the market. If the constitutional amendment allowing “real” casino gambling in New York passes, VLT revenues will be, to say the least, negatively affected. In the shorter run, there already have been suggestions that the State will wake up and take the VLT monies used to subsidize racing to use for other purposes, especially if it perceives — correctly, in my view — that these monies are not being used to assure the long term self sufficiency of the sport.

If you decide, as I strongly suggest you should, to make one of the major goals of your tenure the retention of existing fans and the cultivation of new fans, you then have another major decision to make — whether your future fans will attend the races live, or watch and wager off site. Other than on Belmont day and at Saratoga, I might suggest that the fans already have decided to stay away in droves. Twice in the last year or so, I have been to Belmont on a Saturday, and I was joined by far fewer than 10,000 others. Vast expanses of the facility were closed, and it resembled a ghost town. If the future of horse racing is off-track, it might make sense to begin an ordered shrinking or decommissioning of the little-used facilities at Belmont and, certainly, Aqueduct. Year round racing may serve the needs of horsemen, but does it serve the needs of NYRA?

Off track or on, the most significant thing you can do to retain existing, regular bettors is to work to reduce the takeout which, along with breakage, has made it virtually impossible for regular players to afford to stay in the game. Do not buy the plea of the politicians that “no one will notice another one per cent.” That thinking has brought racing, and, in the context of taxation of businesses and individuals, New York, to its knees. And please don’t tell me that the NYRA One rebates to large players reduce the effective take out. While that program is a start, most of us cannot afford to bet anywhere near enough to qualify for those rebates. If you can’t reduce the take out, throw players a bone or two: how about free admission upon presentation of a NYRA One card, or the elimination of breakage on payouts into the NYRA one account. Bettors who wager a certain amount over a year would be delighted to receive tickets to a pair of club house seats at Belmont or Saratoga. I know that race books in Las Vegas provide significant comps to horse bettors; you could creatively offer a small portion of what they do.

The quality of racing also needs to be addressed. Racing in New York has been dominated by races for New York bred horses, who race in a parallel universe where the purses are the same for comparable races for open company, but the quality is many, many levels lower — so much lower, significantly, that the horses do not run true to form and the races, therefore, often are unplayable. One potential source of funds for reducing the take out is the bloated purses for such races. If you are able, you should restrict use of New York Bred funds to pay bonuses to New York breds that win in open company, as many other states do.

Attracting new fans requires outreach. Racing can be attractive on many levels – as a sport, as a gambling opportunity, and as an intellectual exercise in handicapping. Appropriate marketing materials can be tailored to appeal to people with each of those interests, and free admission days, with free programs and handicapping seminars, could take some of the mystery out of the game for new fans.

If racing is to have a future, the interests of fans (i.e., bettors) need to be served much better than they are now. Unfortunately, fans do not have an effective organized voice, as do the horsemen and their industry; however, the lack of such voice does not diminish the importance of fans to the survival of racing. Throw the fans a bone or two and you will do a lot to get racing heading in the right direction again and to fix the terrible public image of NYRA.

After he was able to cut off the VLT money, apparently Gov. Cuomo got the upper hand over NYRA, as this article suggests. Let’s hope the new, new NYRA (we now have the new NYRA, which hasn’t turned out so great) is a real, substantial improvement, and that at least one of the board members is a representative of the fan base, rather than the other already over-represented interests.

Yesterday, a friend and I attended the horse races at Belmont Park, one of two major thoroughbred tracks in the New York City area (the other is Aqueduct, and they do not compete with each other – when one is open the other is not). Although it was an absolutely beautiful Saturday, and Preakness day, which one would think would cause more folks than usual to think of horse racing, paid attendance (at a venue capable of holding over 100,000, with 33,000 reserved seats, according to Wikipedia), was just a shade over 8,000. The place looked almost abandoned, with whole sections of the stands and betting windows closed off, and many of the food and beverage outlets also closed. It evoked a trip I made to Ellis Island before it became a slick museum, when you could see it literally just as it was when the government closed up shop in the 1950s. Of course, Belmont was still running, but it was a ghost of its former self, and much different than on my last visit, on a Belmont Stakes day several years ago.

I speculated out loud how the state of racing had come to this, and asked my friend (who is for practical purposes new to the game, having attended the races for the first time in ages a few weeks ago with me in Keeneland, which presented a wholly different picture). One problem was the quality of the card. Without going into detail, I’ll just tell you that the feature was a $100,000 stake for State-breds, three and up, at 7 furlongs on the dirt. The race attracted a field of only six, and the favorite — who ran true to form and won — went off at 3-4. The rest of the card, except for one very nice maiden special weight race on the turf, and a couple of allowance races, was the usual mix of state bred and/or claiming (including conditioned claiming, and the dregs-de-la-dregs, state bred maiden claiming) races. My friend, who liked Belmont a lot, did note one difference between it and Keeneland — at Belmont, because the track is so large, few races start in front of the stands. He enjoys watching the starts as well as the finishes, as I’m sure many race fans do. He also mentioned that gambling tastes have probably changed, and people don’t want to put in the work it takes to handicap races when instead they can mindlessly scratch off instant lottery tickets or press the buttons on slot machines.

Nonetheless, given that a family of four could park free, or ride the railroad from the City directly to the track, pay a total of $12 for admission, have a nice picnic in the paddock area in the presence of majestic thoroughbreds and colorfully-clad jockeys, and bet as little or as much as they wanted to and could afford, it was difficult for us to understand how so few people could have decided that an afternoon at Belmont Park would not be a bad way to spend part of a beautiful spring weekend day.

Maybe it doesn’t matter if people show up at the track or not, as long as total handle is enough to sustain the game. People may find it easier and more convenient to bet and watch from remote locations, with the track serving as an entertainment production facility that happens to let people in to watch, like a TV show filmed before a live audience rather than a Broadway show. But that surely wasn’t the intent of those who, some 60 years ago, enlarged the facility to accommodate 100,000 fans.

Fortunately, the possibility of this year’s Belmont Stakes producing the first triple crown winner in several decades will guarantee a full house on June 9. However, if Belmont needs a healthy on track handle to survive, one big day cannot make up for too many days like yesterday, not to mention the even more sparsely attended weekdays and weekend days when the weather is inclement. Aside from inflating the purses (indiscriminately, it seems to me), I don’t see the VLT money that was long anticipated as the savior of horse racing being put to any good use to develop or sustain fan interest. As I’ve written before, I foresee a time in the not too distant future when the State will have had enough and will take the money back to use for other purposes.

It looks as if some jurisdictions that have propped racing up with VLT or slot revenues are having second thoughts, especially given racing’s poor record in taking advantage of the opportunities for recovery those cash infusions provided. The spate of equine fatalities on Aqueduct’s inner dirt track this winter — possibly caused in part by horsemen running unsound stock to chase inflated purses — did not help. A perceptive column by Andrew Beyer in the Daily Racing Form gives the latest details from around the country. Some of the readers’ comments also are spot-on, though I did not see any addressing what I believe is one of the biggest drags on racing in New York – the New York Bred program, which subsidizes inferior stock racing for inflated prices. Some of the NYB program is funded off the bettors via increased takeout, and some by the VLT patrons, via a tax of 1% on gross VLT revenues. Here in my view are the top reforms necessary to give racing a chance at viability:

Shorter seasons at fewer tracks — quality and scarcity, which has worked (to an extent) at Saratoga, Del Mar, Monmouth, Gulfstream, etc.

Lower takeout (and elimination of breakage for wagering account bettors) — to the extent VLT revenue continues, some should be dedicated to that purpose; NYB program should be reduced to awarding NYB horses bonuses for placing in open races, eliminating the NYB only races at ridiculously inflated purses for the quality of entrants, and no part of it should be funded out of the parimutuel takeout

Promotions designed to incentivize potential bettors, not those who snap up freebies and run away before racing starts to sell them on e-Bay

Outreach to potential fans, targeted toward the young, people who gamble in other venues, fans of other sports

Coordination of starting times for OTB and simulcast patrons, who would bet on more races if starting times were more evenly spaced out

Whether racing can compete on its own merits against other forms of sporting competition and gambling is an open question, but it does not have a chance without better management willing to introduce bold new policies.